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Life-cycle management saves Com Ed $31M

Issue 5 and Volume 101.

Life-cycle management saves Com Ed $31M

Upgraded life-cycle management at Commonwealth Edison Co. (Com Ed) has saved the company $31 million in the program?s first 18 months, according to vice president Louis DelGeorge, who is in charge of the new effort. Savings and increased revenues are expected to total $100 million over a three-year period. Life-cycle management, DelGeorge explained, means managing the total return from all the equipment and materials the company uses from design and acquisition through consumption and disposition. Many of the savings are generated at the disposition stage, although the program is broader than salvage management.

OWe didn?t want to create another Oprogram of the month,?O DelGeorge said. He now manages a team of five people trying to change the culture of the whole company to better manage assets. The team uses support software such as the Electric Power Research Institute?s recently released Life-Cycle Cost Management Software, pilot projects, metrics and publicity. The biggest project so far was conversion of unused oil storage capacity to gas storage at the company?s Collins Station. The empty tanks were a maintenance cost of as much as $3 million a year. Now they?re revenue generators. Another good example is transformer refurbishment and decommissioning. That job was being done by an outside contractor, and it looked like a good deal because revenue exceeded cost. However, life-cycle analysis of transformer assets showed that it made sense to bring the function inside and rebuild and reuse more of the transformers.

Net annual revenue climbed almost immediately from $263,000 to $900,000, and there is significant growth potential. The centralized approach energizes the operating departments to take a fresh look at opportunities to cut costs in unexpected places, and it helps cross departmental lines when that?s necessary, said DelGeorge. Another benefit of life-cycle management has been reduced environmental impact through increased salvage and reduced disposal in several areas.